Maintain Your Budget
When building a new home, controlling costs is the key to staying within budget
Hire a builder that will stay in your budget.
It’s safe to say no one likes cost overruns or unpleasant surprises on a project. New home construction is no exception. As a professional builder, we understand how critical it is to establish and maintain a budget that everyone can rely on from groundbreaking to the final walk-through.
When a project’s budget is busted, it harms the builder as well as the homebuyer. Often, it’s a cost that the company shares. Going over budget not only erodes a builder’s profit but also can damage their reputation and potential for referrals.
As a professional builder, we are diligent about setting a budget and actively managing that budget through construction for each new home we build. It is in everyone's best interest to make sure the budget stays on track. Here are some methods we use to meet that goal:
Value engineering
Value engineering is the practice of optimizing construction costs while maintaining (or improving) housing performance and durability. It requires that the builder be on the project team from the outset, working with you and your design professional to identify and make the best use of materials and refine all costs before breaking ground.
Negotiated subcontracts
The goal here is to attract the most talented and highest quality trade partners at the best possible price. Established builders work with a team of reliable and professional trade contractors. Rather than focusing on lowest price (and risking quality), professional builders will take the plans and specifications to their best subs and negotiate a set cost for the work. Then those numbers are added to the budget, and the contractors are held to their original estimates.
Price guarantees
Similar to negotiating with their trade partners, professional builders may seek to get guaranteed pricing from their materials suppliers as early as possible, and for as long as possible. Setting a ceiling on prices is critical when material costs, such as for lumber or copper, are volatile and likely to rise even before construction begins.
Details, details
Costs are more easily kept in check when every penny is tied to either a specific stage of the process (such as rough framing or roofing) or materials or products (such as a dishwasher or garage door). In this way, professional builders can track all costs to a detailed scope of work and materials list.
Milestones
Professional builders don’t wait until the end of the job to find out if they are still on budget. Instead, they set key milestones during construction to make sure costs match the amount of work that’s been completed. Tracking costs during the project allows discrepancies to be caught early—ideally before they impact the overall budget.
Tracking changes
While change orders are a part of virtually every home we build, they remain the cause of most cost overruns and time delays during a home construction project. So smart builders plan for changes. They have formal policies and procedures in place to manage change requests and payments efficiently, minimizing cost overruns and time delays.
These strategies go a long way to ensuring cost control on a new home project, protecting everyone from an unpleasant experience and helping ensure a high level of quality and customer satisfaction.
Warm regards,
Tim Alexander